Sirius Minerals delays feasibility study on York Potash Project

Sirius Minerals, a potash development group, has said that it will be delaying the start of the majority of the definitive feasibility study (DFS) work on the York Potash Project until the second quarter of 2013 after being advised that engineering procurement construction management (EPCM) and engineering procurement construction (EPC) methodologies are the most suitable approach for the project.

It said the revised DFS is targeting completion for the fourth quarter of 2013, although initial project construction works are anticipated to begin following the grant of approvals.

Chris Fraser, Managing Director and Chief Executive Officer of Sirius, commented: "The EPCM/EPC implementation approach adds value to the York Potash Project by matching the contracting implementation methodology to the project design. Moving to this methodology has enabled us to collate more technical data prior to undertaking the major components of the definitive feasibility study."

As part of the change in methodology, the company announced the departure of Alan Watling, who led the Project Study work, following the recommendation to use a combination of EPCM and EPC contracting strategies - rather than the implementation methodology that was initially envisaged.

Watling will be replaced by an as yet unnamed "highly qualified and internationally recognised" Senior Project Director, who is described as having extensive experience in EPCM and EPC contracting.

"This revised schedule will enable the drilling results of SM11, with respect to the shaft engineering, resource, and mine planning to be fully incorporated into the DFS scope before formal commitment to the majority of the DFS work," the company said.

"Progress will continue on various work streams to optimise the project and refine the DFS scope [...] The company is also intending to undertake a value engineering process to identify and select all capital and operating cost optimisation options so that they can be reflected into the scope of the DFS.

"The work completed between now and the commencement of the majority of the DFS will help reduce the cost of the DFS by enabling the scope to be more accurately defined before commitment to the major external engineering costs."

It added: "The company and its consultants believe that due to the simplified project design adopted in the Project Study, it will take approximately six months to complete the DFS from the commencement of the major components."

The share price fell 9.57% to 26p by 13:30.

NR